Honeywell’s New Competitor: Google

By Ben Levisohn

Yesterday, Google (GOOG) announced that it would purchaseNest Labs, a maker of “smart thermostats,” for $3.2 billion. And while investors look on the move with approval, at least one company is smarting: Honeywell (HON).

Corbis

Citigroup’sDeane M. Dray and team explain why:

This acquisition now pits Google as a direct competitor to Honeywell in thermostats. We note that Honeywell has patent litigation pending with Nest which evidently did not deter Google. For context, residential products represent roughly 15% of Honeywell’s Automation and Control Solutions segment revenue, or roughly 6% of total sales…

This acquisition now pits Google as a direct competitor to Honeywell in thermostats. We note that Honeywell has patent litigation pending with Nest which evidently did not deter Google. For context, residential products represent roughly 15% of Honeywell’s Automation and Control Solutions segment revenue, or roughly 6% of total sales.

The emergence of Nest Labs and [Google's] entry into the market demonstrates the intensifying market place for building controls. Given [Honeywell's] history of product innovation we would anticipate an aggressive response to continue to protect its number-one market share position.

Shares of Honeywell have dropped 0.4% to $88.55, while Google has gained 1.4% to $1139.25.

About Stocks To Watch

Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.